Assume the required reserve ratio (RRR) is 10 percent. If the Fed purchases a $5,000 bond from a bond dealer who then deposits the $5,000 in a HSBC Bank account, what has happened to the money supply?
a. It has decreased by $5,000.
b. It has increased by $5,000.
c. It has decreased by $4,500.
d. It has increased by $4,500.
e. There has been no change in the money supply.
B
Economics
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